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Why Gilead Sciences Shares Rose 7.79% in March

The promise of Gilead’s coronavirus treatment lifted the shares.

Adria Cimino grew up with her nose in a book and a love of storytelling. By a twist of fate, she started her career writing about biotech in Boston and discovered that each company is the source of many fascinating stories. Prior to joining The Fool as a contract writer focused on healthcare and consumer goods, Adria covered the stock market for Bloomberg News in Paris. When she’s not analyzing companies, she can be found writing fiction or trying to speak French as well as her 9-year-old daughter.

What happened

Shares of Gilead Sciences(NASDAQ:GILD) rose 7.79% in March, according to data provided by S&P Global Market Intelligence, even as stocks moved into a bear market. Investors flocked to shares of companies developing treatments for COVID-19, the illness caused by the novel coronavirus.

Image source: Getty Images.

The coronavirus outbreak has now reached 900,300 cases worldwide, and demand for Gilead's investigational treatment, remdesivir, has skyrocketed. Though the drug isn't approved for COVID-19 or any other indication, Gilead has been able to provide it to some patients based on a "compassionate use" program. A World Health Organization doctor said the treatment showed promise according to media reports earlier this year, and Gilead confirmed that remdesivir has been used in more than 1,000 patients so far.

So what

Since there isn't an approved treatment or vaccine for COVID-19, the promise of remdesivir has pushed Gilead to the forefront. The drug currently is involved in two phase 3 clinical studies to evaluate safety and efficacy.

However, if remdesivir is approved, it's unlikely to become a long-lasting blockbuster for Gilead. Addressing pandemics generally isn't extremely profitable for drugmakers over the long term. That is due to the short time frame of a pandemic and the ethical question of pricing a treatment too high. Still, the spotlight on Gilead may draw investors' attention to the company's robust pipeline and marketed products in areas including HIV and cardiovascular disease.

Now what

Investors, patients, and healthcare workers are eagerly waiting for the results of the remdesivir trials and an eventual regulatory approval. Any positive news will likely send the shares higher. For the long term, though, investors should monitor news on Gilead's rheumatoid arthritis treatment, filgotinib. The company submitted the drug to the U.S. Food and Drug Administration for review in December with a priority review voucher, which generally reduces review time to about six months from the standard of 10 months. A positive verdict there may be important for long-term gains in this biotech stock.